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1.27.2017

President’s Blanket Tariff Threatens Video Games

Trump Presidency Considering New Taxes on Entertainment

The Trump administration is considering placing a blanket tariff of 5 percent, or maybe even 10 percent on imported goods. A tariff is a tax on imported goods and services used to make the imported goods more expensive than the same U.S. produced item. This new tariff is almost certain to affect both video games and consoles.

According to Polygon, the Entertainment Software Association (ESA) is already preparing for the worst, and is preparing a plan to deal with the tariff, if imposed. On Monday, President Trump signed an executive order to withdraw from the Trans-Pacific Partnership, and also met with business and union leaders. The President does not need approval from Congress for a tariff, because he can use existing rules to pass one.

“The tax will only affect games and consoles imported to the U.S., but all three major consoles are manufactured in China.”

The tax will only affect games and consoles imported to the U.S., but all three major consoles are manufactured in China. It will also affect a large number of foreign developers like FromSoftware (Dark Souls series), CD Projekt Red (The Witcher), and Capcom (Resident Evil), as well as many independent developers.

Game prices have been around $50 to $60 since the PlayStation era, (a good write up on video game price history can be found here) but gamers may soon have to pay up to $66 before state taxes per game. Even worse, a $300 console will have an extra $30 or so added to its price tag.

While the Trump presidency hasn’t yet signed the tariff into law, their campaign platform of bringing more jobs stateside makes the tariff very likely. Many are concerned that a blanket tariff could start a trade war with other major countries, and it is uncertain how the tariff will affect the increasingly digital marketplace. A tariff on major digital platforms like Steam won’t necessarily kill those businesses, but they could lower sales and increase piracy.